Jewellery classification turns on dominant character, and a precious-metal watch was treated as jewellery rather than a watch.

An article of personal adornment made predominantly of gold, precious metals and stones does not lose its character as jewellery merely because it incorporates a watch movement. Applying the widest construction to Entry 13(ii) of Schedule II to the Value Added Tax Act, the Gujarat HC treated the dominant character and mode of manufacture as decisive, noting substantial craftsmanship and sale through jewellery showrooms. The NEBULA Jewellery Watch was therefore classifiable as jewellery under Entry 13(ii) and not under the residuary watch entry.

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Issues: Whether NEBULA Jewellery Watch is classifiable as jewellery under Entry 13(ii) of Schedule II to the Value Added Tax Act or as a watch under the residuary entry.

Analysis: The item was found to be made predominantly of gold and other precious metals and stones, with the watch mechanism forming only a minor component. Its manufacture involved substantial manual craftsmanship and it was marketed through jewellery showrooms. Applying the widest possible construction to the entry, the Court held that an article of personal adornment made predominantly of precious metal and stones does not lose its character as jewellery merely because it also contains a watch movement.

Conclusion: NEBULA Jewellery Watch falls within Entry 13(ii) of Schedule II to the Value Added Tax Act and not the residuary watch entry.

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